the proposal: a 5% tax on remittances

the core of the controversy is a proposal to impose a 5% tax on remittances sent from the u.s. to latin american countries. this idea, originating from republican circles, has sparked widespread criticism, especially in mexico and other nations heavily reliant on these funds [3].

mexicoS strong opposition

mexico has emerged as a leading voice against the proposed tax. claudia sheinbaum, the president of mexico, voiced her disapproval at a hospital inauguration in los cabos, stating, you cannot tax twice to those who already pay taxes.

her choice of venue underscored the socio-political implications of the issue. mexican senator antonino morales, of the morena ruling party in oaxaca, has criticized the proposals as openly discriminatory and racist, as they effect foreigners with an irregular residence in the united states. he also noted that, apart from the remittance tax, identity controls will restrict their access to programs such as obamacare or medicare.

economic impact: billions at stake

the numbers paint a clear picture of the economic importance of remittances:

• in 2024, remittances from the u.s. to latin america and the caribbean totaled approximately $160.9 billion, an increase of $7.7 billion from the previous year.
• mexico is the largest recipient, with $64.7 billion, followed by guatemala with $21.5 billion.
• this translates to about $177 million entering mexico every day.

jesús alejandro cervan gonzález,of the center for latin american monetary studies (cemla),emphasized the importance of remittances relative to gdp:

if we compare remittance income in relation to the gross domestic product of the countries of the region,in 2024 they represented about 20 percent of gdp in guatemala. in nicaragua, 27 percent, in honduras, 26 percent, in el salvador, 24 percent, in haiti, 20 percent and, in jamaica, 19 percent.
jesús alejandro cervan gonzález, cemla

cemla studies indicate that 4.5 million homes and 9.8 million adults in mexico receive remittances,primarily benefiting the poorest rural areas. remittances relieve the budgetary limitations of millions of receiving homes and reduce their poverty levels. they allow them to enjoy a higher level of living and contribute to finance expenses in consumer goods, education, health, housing and, in some cases, investments in family businesses, cervantes gonzález explained.

florida’s identity control proposal

in florida, gov. ron desantis is considering implementing identity controls on money transfers. the aim,according to the economist,is to ensure that senders can prove they are legally employed in the u.s., targeting irregular migration.

potential consequences and the black market

the remittance tax, potentially effective from 2026, could significantly reduce the volume of money sent to latin america and the caribbean. this would disproportionately affect countries like mexico, guatemala, honduras, el salvador, and nicaragua, given their high reliance on these funds.

cervantes gonzález warns of a double blow: since this tax adds to the continuous deportations of undocumented immigrants and occurs at a time when there are indications that the united states is experiencing a decrease in employment among immigrants in the latin american region.

moreover,the cemla expert anticipates a rise in informal remittance channels: remittance tax could lead to shipments being made informally through messengers or through digital transfers through cryptoactive.

latin voters and the midterm elections

the proposed tax and related immigration policies could impact the 2026 midterm elections. images of migrant arrests and negative news for latin america may influence latin voters, particularly in states like florida. president sheinbaum has urged mexicans residing in the u.s. to voice their concerns to local politicians.

while some deputies have reportedly stalled the proposal, the initiative remains a concern.

faq: remittance tax proposal

what is a remittance tax?

it is indeed a proposed tax on money sent by migrants to their home countries.

who proposed the tax?

republicans in the u.s. are behind the proposal.

which countries would be most affected?

mexico, guatemala, honduras, el salvador, and nicaragua are particularly vulnerable.

when could the tax take effect?

potentially from 2026.

who would pay the tax?

in principle, the tax would only apply to immigrants who are not us citizens. this includes both undocumented immigrants and those who have documented residence, that is, they are legally in the united states, according to cervantes gonzález [1].